After a dismal 2001 and 2002, Lawrence’s commercial real estate market has been on the rebound during the past 18 months.

Lawrence vacancy rates for office, industrial and retail real estate all checked in below the national average, according to an annual Grubb & Ellis survey conducted in December, and a local real estate broker said he thought Lawrence’s situation would continue to improve.

“Quite frankly, not a lot has changed since then,” said Kelvin Heck, a broker with Grubb & Ellis/The Winbury Group. “It’s not regressing. Business-wise, I’d say there are a lot more tenants in the market looking for space than we’ve had in the last year-and-a-half. A lot of businesses in Kansas City and Topeka are looking to us for space, and that’s been a refreshing thing we haven’t seen in a while.”

Using data from the Douglas County Appraiser’s Office, Grubb & Ellis found the following vacancy rates:

• Office space had a vacancy rate of 15.7 percent, down from 17.8 percent in 2002, and below the national average of 17.5 percent.
• Industrial space logged a 5.7 percent vacancy rate, unchanged from a year ago, and well below the 10 percent national average.
• Retail space rose from 5.2 percent in 2002 to 7.2 percent in 2003. The report noted that when already announced tenants move into the former Kmart building at 31st and Iowa streets, the rate would fall to 5.3 percent. Nationally, the average is 12.3 percent.

Heck said the office and retail rates have remained consistent since the survey was done. The only major change, he said, was a slight rise in the industrial rate because of the recent vacancy of the Honeywell building.

“I think we’ll have a reasonably active year in 2004,” Heck said. “It depends on what the elections bring in the fall, but I foresee some pretty steady times for us for a while.

“Some other areas across the state aren’t doing as well as we are right now,” he added. “But Lawrence, Johnson County and Douglas County are doing pretty well, so it feels pretty good to be in a place like Lawrence right now.”

Bill Newsome, of Lawrence-based Southwind Capital, said steady investor confidence during the past 16 months was another sign the market was rebounding.

“From what we’ve seen from lenders, I think we’re seeing the same relative appetite to make real estate loans,” Newsome said. “There hasn’t been a pull-back in that area, so that’s a definite positive.

“There’s still ample money out there to do solid-based commercial real estate projects. It might not be as plentiful as it was three years ago, but there’s still capital out there to do those projects.”